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Zosano Pharma Corporation (NASDAQ:ZSAN): Immense Growth Potential?

Simply Wall St

In December 2018, Zosano Pharma Corporation (NASDAQ:ZSAN) announced its latest earnings update, which showed that losses became smaller relative to the prior year's level as a result of recent tailwinds Below is my commentary, albeit very simple and high-level, on how market analysts view Zosano Pharma's earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

See our latest analysis for Zosano Pharma

Market analysts' prospects for the coming year seems relatively subdued, with earnings continuing to flop around in the negative territory, generating -US$34.7m in 2020. However, earnings are predicted to move into an upward direction, generating -US$41.6m in 2021, before plateauing down to -US$15.2m in 2022.

NasdaqCM:ZSAN Past and Future Earnings, April 22nd 2019

While it’s helpful to understand the growth year by year relative to today’s value, it may be more insightful to evaluate the rate at which the business is growing every year, on average. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Zosano Pharma's earnings trajectory over time, be more volatile. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means that, we can assume Zosano Pharma will grow its earnings by 13% every year for the next couple of years.

Next Steps:

For Zosano Pharma, I've put together three important factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for ZSAN's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ZSAN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.